Mr. Morrison's exit followed the latest round of disappointing soup sales data -- showing Campbell's volume declined 5.2% for the four weeks ended Feb. 27, according to Information Resources Inc. The numbers show the fruitlessness of a major advertising campaign for Campbell's entire portfolio of soups -- minus the Chunky brand -- from BBDO Worldwide, New York.
NEW DIRECTION -- 'QUICKLY'
"Campbell's marketing and ad campaigns have been less than successful in boosting soup sales, and I expect they will have to go in a different direction pretty quickly if they don't see results in the near term," said Patrick Schumann, food analyst at Edward Jones.
An executive close to Campbell put it more bluntly: "I think there may be an agency search at some point soon. [BBDO's ads themed] `We have a soup for that' clearly didn't work, and [the agency's] relationship is with Mr. Morrison."
Speculation is rife that should Campbell shift the business, it likely would go to Y&R Advertising, New York, which handles Chunky, the soup division's star performer. A Campbell spokesman declined comment.
An executive at BBDO said its relationship with Campbell is solid, despite Mr. Morrison's departure, and termed its most recent campaign "successful."
But figures belie that assessment. Just prior to the November launch of "We have a soup for that," IRI's four-week data showed Campbell's soup volume down 2% -- a decline that grew steeper after the effort had been on the air for three months.
"We have a soup for that," intended to show how specific Campbell soups fit into consumers' contemporary lifestyles, follows the equally ineffective "Good for the body, good for the soul" theme, also from BBDO.
At the time of the latest campaign launch, BBDO Co-CEO and Chief Creative Officer Ted Sann conceded that, "In the past, we've run into difficulty because Campbell Soup's strong brand heritage was almost antithetical to changing it for today."
By the look of it, that still seems to be the case. And the problems go deeper than the marketing.
"Campbell needs new products to market behind," said David Nelson, food analyst at Credit Suisse/ First Boston. "They need better and more innovation that shows they can keep up with rapidly changing consumer tastes and trends."
Recent new-product efforts, including Soup to Go! and tomato soup in resealable plastic packaging -- both of which are highlighted in BBDO's new umbrella campaign -- fall under the ready-to-serve segment of Campbell's $3 billion soup business. But the condensed segment, which makes up 70% of that business, is "still in the same boring, stupid can they've always had, the one they introduced probably 120 years ago at the World's Fair," said a clearly frustrated Bill Leach, analyst at DLJ Securities.
The failure to focus on building the condensed soup segment that makes up the lion's share of Campbell's volume and profit is cited by another executive close to the company as part of the now-departed Mr. Morrison's "severely flawed" strategy.
"Dale's idea was to give up on condensed soups and concentrate on ready-to-serve, but it's impossible to grow that business fast enough to offset the declines in condensed," the executive said.
Sales for Chunky rose 17% and Simply Home grew 12% for the 52 weeks ended Dec. 5, according to IRI, but those brands together total only $440 million.
Furthermore, Mr. Morrison continually failed to meet quarterly earnings targets, which weakened his credibility with Wall Street, and he cut the advertising and marketing budgets he had pledged to increase as a way to create growth. Media expenditures for Campbell brands fell from $245 million in 1998 ($126 million of which was spent on soup) to $184 million in 1999, ($105 million of which was allocated to soup), according to Competitive Media Reporting.
Through all Campbell's turmoil, ex-president-CEO David Johnson -- who returned in glory to Campbell as interim president-CEO last week after his departure in 1997 -- has remained a hero. Though Campbell has said Mr. Johnson is back only for the time it takes to bring in new management, some feel there's more on the agenda.
QUICK SELL-OFF AHEAD?
"David Johnson is back for one reason: to get the stock price up. And the only way to do that quickly is to sell the company," said an executive close to the situation. "Mr. Morrison erased more than 50% of the value of Campbell, and the only way to get out of that is to sell," he added.
That contention was quickly quashed, however, by Mr. Johnson himself. At an internal meeting with employees March 23, he dismissed media reports that he was returning to dress the company up for sale, saying he was "in it for the long run," according to an executive with knowledge of the gathering.
One sticking point for a sale may be price. Even with the depressed rate of Campbell's stock, the price tag would still be in the $20 billion range, DLJ's Mr. Leach estimated, a price only behemoths such as Nestle or Unilever could afford. And Mr. Leach said he fails to see any benefit to a company that would acquire Campbell. "What would be the value of buying a company that has 70% market share of a flat to declining category?"
Contributing: Richard Linnett